During infections by pathogens, such as viruses, bacteria, and parasites that invade human cells an important component of the immune defense against infection are natural killer (NK) cells. NK cells are a group of lymphocytes that differ from B and T lymphocytes by responding much faster to infections. Unlike B and T cells, NK cells do not express antigen-specific receptors. Therefore, proliferation and activation of NK cells does not begin with a few rare NK clones but with the majority of NK cells. Various chemokines and cytokines, such as type I interferons or interleukin (IL)-12 which are produced early during infections, activate NK cell responses. NK cells exert their function in two ways: by producing cytokines such as interferon-gamma and by killing infected cells. NK cells can also kill certain tumor cells. Despite the importance of NK cells in the innate response to many types of pathogens, it is still unclear what receptors and what signal transduction pathways control their activation. NK cell inhibitory receptors that recognize surface molecules called major histocompatibility complex class I (MHC class I) prevent the killing of normal, healthy cells. The major goal of this project is to define the molecular basis of MHC class I recognition by inhibitory receptors on NK cells and how recognition of MHC class I by these receptors results in a negative signal transmitted to the NK cell. In addition, the regulation of NK cell activity by inhibitory receptors serves as a model to study other receptor systems that use a similar mode of negative regulation. NK cells express killer cell immunoglobulin-like receptors (KIR) that are specific for MHC class I. The KIR2D receptors bind to the MHC class I molecule HLA-C. KIR molecules that are bound to MHC class I on target cells become tyrosine phosphorylated and recruit the tyrosine phosphatase SHP-1 to an amino acid sequence motif, called immunoreceptor tyrosine-based inhibition motif (ITIM), in their cytoplasmic tail. A mutated SHP-1 molecule, which was engineered and expressed in NK cells, was used to identify Vav1 as the direct substrate of SHP-1 during inhibition of NK cell cytotoxicity. Vav1 is a guanine exchange factor that activates the small GTPase Rac1, thereby activating actin polymerization and receptor clustering. The identification of Vav1 as the substrate of SHP-1 during inhibition of NK cell cytotoxicity by KIR has led to a new model of how inhibitory receptors control NK cell activation. For example, tyrosine phosphorylation of the activation receptor 2B4 induced by contact with target cells is not blocked by direct dephosphorylation when SHP-1 is recruited by KIR, but by a block of actin cytoskeleton-dependent clustering of 2B4 and of 2B4 phosphorylation in glycosphingolipid-enriched membrane domains. Therefore, KIR blocks a central step in the activation pathway of NK cells that regulates other downstream signals, such as tyrosine phosphorylation of activation receptors. Engagement of KIR by its ligand HLA-C alone was sufficient to result in both clustering and tyrosine phosphorylation of KIR, independently of actin polymerization. This unique property of KIR can explain how this receptor inhibits very proximal activation signals when NK cells contact target cells.